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The Two Sector Model of Learning-By Doing and Productivity Differences

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  • Tuna Dinç

    ()
    (Department of Economics, Yildiz Technical University, Turkey)

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    Abstract

    This paper proposes that even when all countries have access to common technology frontier and can use the technologies which are fully appropriate to their needs, there will still be productivity differences across countries depending on their relative skill endowments. To illustrate this view, we have constructed a two sector model of productivity differences in which the level of technology is determined endogenously depending on the aggregate capital externalities. The relative supply of skilled and unskilled labor determines the direction of technical choices of the countries and differences in these relative factor supplies lead to cross-country income differences combined with the fact that capital is more productive in the advance of the skilled labor complement technologies than in the unskilled labor complement technologies.

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    File URL: http://www.panoeconomicus.rs/casopis/2012_5/03%20Tuna%20Dinc.pdf
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    Bibliographic Info

    Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

    Volume (Year): 59 (2012)
    Issue (Month): 5 (December)
    Pages: 583-598

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    Handle: RePEc:voj:journl:v:59:y:2012:i:5:p:583-598

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    Web page: http://www.panoeconomicus.rs/

    Related research

    Keywords: Productivity differences; Technological change; Skilled/unskilled labor;

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    1. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
    2. Los, Bart & Timmer, Marcel P., 2005. "The 'appropriate technology' explanation of productivity growth differentials: An empirical approach," Journal of Development Economics, Elsevier, vol. 77(2), pages 517-531, August.
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    16. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-51, August.
    17. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
    18. Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
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    20. Jörg MAYER, 2001. "Technology Diffusion, Human Capital And Economic Growth In Developing Countries," UNCTAD Discussion Papers 154, United Nations Conference on Trade and Development.
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